City Offers $20M to Help Nonprofit or Developer Buy Any Garment District Building
The New York City Economic Development Corporation is searching for a landlord or nonprofit that wants to partner with the city and buy a building in the Garment District, and it’s willing to pony up $20 million in public funds to make it happen, Commercial Observer can first report.
This morning, EDC will release a request for expressions of interest (RFEI) to find a real estate team willing to work with the city to acquire a property in or near the soon-to-be-rezoned Midtown neighborhood and create a hub for fashion businesses. The agency would cover up to $20 million, or 30 percent of the purchase price, whichever is less. The city would own part of the property, but whether it has a majority or minority ownership stake would depend on the structure of the deal, according to members of EDC’s real estate services group. Whoever secures the bid for the project could enter into a joint venture with EDC, or the agency could acquire the building and sign a ground lease with the winning developer or operator.
Officials will give preference to proposals that include a nonprofit partner and involve a building of at least 100,000 square feet. The winning landlord must operate the building as a space for apparel makers and must follow the rent limits set by the city’s new Industrial Development Agency program for the Garment District. Owners who enroll in the program have to offer leases of at least 15 years and cap rents at $35 a square foot, in exchange for receiving a 15-year-long tax break.
“This component of the Garment Center plan is vital to the industry as well as the city, because the entire New York fashion world depends on having an accessible, skilled, local manufacturing base,” said Manhattan Borough President Gale Brewer, who led the steering committee for the rezoning with City Council Speaker Corey Johnson.
Buying a building—ideally run by a nonprofit that wants to keep lower-paying apparel makers and fabric wholesalers—is part of the city’s plan to assuage fashion tenants alarmed by a proposed rezoning of the Garment District. City officials are currently pushing through a rezoning of the special district that runs from West 36th to West 40th Streets and from Broadway to Ninth Avenue. In an effort to encourage more redevelopment, planners will scrap a 30-year-old rule that requires landlords who convert manufacturing buildings to residential, hotel or office uses to preserve an equivalent amount of industrial space in the property. The rezoning will also allow new mixed-use development on several blocks between Eighth Avenue and Broadway that are currently zoned exclusively for retail, office and industrial uses. Both the changes are making manufacturers nervous.
Despite some opposition to the rezoning, a number of trade organizations in the area support the EDC plan to develop a clothing manufacturer center.
“The acquisition of a building is an important piece in the plan to create long-term stability for New York City apparel manufacturers,” said Barbara Blair of the Garment District Alliance. “A building dedicated to apparel manufacturing will allow for real estate certainty and is part of an overall program that will ensure the city’s fashion ecosystem in the Garment District while ensuring opportunity for other business sectors in the district.”
The Council of Fashion Designers of America also backed the proposal. The group’s president, Steven Kolb, said that it “directly aligns with the needs of our industry to help preserve and support the entire fashion ecosystem.”